In a historic moment for Uganda’s financial sector, President Yoweri Museveni officially launched Salaam Bank, the first licensed Islamic financial institution in the country. The launch ceremony, attended by key stakeholders and dignitaries, marked a significant milestone in promoting Islamic banking principles in Uganda.
Addressing the management of Salaam Bank during the launch event, President Museveni welcomed the bank to Uganda’s thriving market, highlighting the country’s growing population, which is expected to reach 100 million in the next 30 years. He expressed gratitude to Salaam Bank for choosing Uganda as its base to offer Islamic banking services, emphasizing the bank’s role in serving Ugandans in line with Shariah principles.
“I welcome you Salaam Bank to Uganda, this is a big market, the population is now 48 million, in the next 30 years, the population of Uganda will be 100 million. Thank you very much for coming, you will straight away begin to serve Ugandans in line with Islamic Banking”- Said President Museveni.
The journey towards introducing Islamic banking in Uganda began with the passing of bills by the Ugandan parliament on June 29th, 2023, authorizing Islamic banking operations. President Museveni played a pivotal role in overseeing the legislative process, signing the bills into law in August of the same year. These legislative efforts facilitated the establishment of Salaam Bank Ltd, a subsidiary of Djibouti-based Salaam Group, which received the Islamic banking license from the Bank of Uganda on September 8, 2023.
Islamic banking operates based on Shariah principles, where banks and customers are considered partners sharing profits or losses based on agreed-upon terms. The prohibition of interest (Riba) under Shariah law is a fundamental aspect of Islamic finance, promoting ethical and equitable financial practices.
Salaam Bank Uganda’s launch represents a strategic step towards inclusive financial services, catering not only to Muslim communities but to all Ugandans seeking Shariah-compliant financial solutions. President Museveni emphasized that accessing Islamic financing products at Salaam Bank would be based on financial needs and requirements, ensuring accessibility to all citizens without religious discrimination.
The Financial Institutions Act (FIA) Amendment Act accommodates both Islamic and non-Islamic financial institutions to engage in Islamic finance, provided they adhere strictly to Shariah principles. The act mandates the establishment of Shariah Advisory Boards within financial institutions offering Islamic financial services to ensure compliance with Shariah laws and regulations.
With the Central Bank retaining its supervisory role over financial institutions, including those offering Islamic banking services, the FIA Amendment Act also provides for the Central Shariah Advisory Council in the Bank of Uganda. This council plays a crucial role in advising on regulatory matters and supervising Islamic banking operations in Uganda, ensuring transparency and adherence to Shariah standards.
The entrance of Salaam Bank into Uganda’s financial sector marks a pivotal moment, introducing not only Shariah-compliant banking options but also contributing significantly to the sector’s development and diversification. Salaam Bank’s offerings cater to a segment of the population that adheres to Islamic finance principles, addressing a longstanding need for inclusive banking services.
By providing a number of products, Salaam Bank enhances financial accessibility for Muslims and other interested parties, promoting financial inclusion and deepening the country’s banking landscape.
Moreover, Salaam Bank’s emphasis on ethical banking practices sets a positive precedent within Uganda’s financial industry. The bank’s commitment to transparency, fairness, and social responsibility not only benefits its customers but also encourages other institutions to adopt similar principles.
Salaam Bank coming into Uganda doesn’t just offer Islamic banking but also helps make banking more fair and responsible. This change doesn’t just make banks more sustainable but also helps keep the economy stable and strong. In short, Salaam Bank joining Uganda’s banking scene is a positive move toward fair finance, including more people in banking, and improving Uganda’s overall financial system.
